Which of These Is a Criticism of the Physical Capital

question 20

Multiple Choice

Which of these is a criticism of the physical capital concept?

• A)It is not meaningful if the firm does not continue to replace identical units
• B)When costs are decreasing a profit may still be recorded when a company sells a product for less than purchase price
• C)When a company buys and sells in the same market it will record zero profit
• D)All of the above

---

Definitions:

Sunk Cost

Expenses already paid that cannot be retrieved and should not affect upcoming business choices.

Specialized Resources

Resources that are particularly suited or adapted for specific tasks or industries, leading to efficiencies in production and increased economic output.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on.

Natural Monopolies

A situation in which a single firm can supply a product or service to an entire market at a lower cost than could two or more firms, leading to a market structure where only one business exists.